From Transactions to Enterprises
A new approach to delivering high performing infrastructure Infrastructure Client Group March 2017
Why do we need to change?
Why do we need to change? Britain needs high performing infrastructure. Without it we have little hope of improving the productivity of our economy. Without an improvement in productivity we will not be able to secure the quality of life demanded by our growing population. Yet the model we use to deliver and operate much of our infrastructure is broken. Too often it produces assets and networks that are expensive, perform poorly and fail to exploit the advances in technology that are transforming other industries. Too often the supply chain that delivers our infrastructure seems locked into a cycle of low margins, low investment and dysfunctional relationships.
What are we going to do about it? We are creating a community of infrastructure owners and suppliers committed to change. We are committed to a moving away from transactional, cost driven procurement of individual assets. We are embracing the creation of value driven, collaborative teams that can deliver investment programmes that secure the outcomes demanded by clients and the public.
How can I get involved? ICE is working with a group of leading infrastructure owners under the ba nner Project 13 to:
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Pilot new approaches to delivery on live projects Offer peer review and support to other colleagues seeking to implement the ideas in this report Disseminate findings through a programme of publications and events
If you want to join the Project 13 community and help transform our sector please contact [email protected]
or visit ice.org.uk/project13
A new approach to delivering high performing infrastructure
Foreword Andy Mitchell Chair of the Infrastructure Client Group and CEO Tideway
As infrastructure owners, ICG members are committed to a modern infrastructure that enables the UK economy to grow and its productivity to improve. We are delighted that government shares this view and has placed high performing infrastructure at the heart of its plans. The status quo cannot be relied on to deliver this outcome. Our traditional approach to procuring infrastructure is already struggling to provide the innovative technical solutions and efficient project delivery we need. This situation is likely to get worse as we move into a new era of infrastructure development. Most investment is now in existing networks, whose owners are rightly focusing their resources on delivery of services – and value - to their customers. These networks are becoming more integrated and are increasingly reliant on digital technologies for their operation. There is ample evidence that in this environment a procurement model that is based on a series of isolated, highly transactional relationships between owners and their suppliers will not offer best value and often deliver a poor service. This is why we need a new approach. If we are to give the public the services they need at a price they can afford we need to secure the best possible outcomes with the limited resources we have. Fortunately we can draw on experience from here in the UK. For example, in the water sector Ofwat has used its quinquennial negotiations with the water companies to improve services to customers, reduce costs and limit carbon emissions. They have moved towards regulation based on outcomes and the combined efficiency of their operating and capital expenditure. The companies have responded to this challenge by developing new delivery models for their investment programmes. They have moved away from lowest price as their measure of value for money and are working with their suppliers to access the skills and technologies they need to build the right infrastructure and achieve the best possible outcomes for their customers. Similar approaches are emerging in